Apple iPhone Causing Upheaval in Cellular Industry

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The latest ChangeWave consumer cell phone survey - completed July 20, 2007 - shows a virtual upheaval occurring among cell phone manufacturers and service providers as a result of Apple's (AAPL) entry into the space. Although iPhone sales are still in their nascent stages, the effects on cell phone manufacturers are already beginning to take shape - and no company is bearing the brunt of this more than Motorola (MOT). While it still leads all other manufacturers in terms of current market share (31%), Motorola has dropped 2-percentage points since a previous ChangeWave survey in April to its lowest level in more than a year.

The ascendance of the iPhone is going to be a game-changer for both cell phone manufacturers and cellular service providers.

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The latest ChangeWave consumer cell phone survey - completed July 20, 2007 - shows a virtual upheaval occurring among cell phone manufacturers and service providers as a result of Apple's (AAPL) entry into the space.

A total of 3,003 members of the ChangeWave Alliance participated in the survey, which was conducted just weeks after the much ballyhooed release of the Apple iPhone.

Although iPhone sales are still in their nascent stages, the effects on cell phone manufacturers are already beginning to take shape - and no company is bearing the brunt of this more than Motorola (MOT). While it still leads all other manufacturers in terms of current market share (31%), Motorola has dropped 2-percentage points since a previous ChangeWave survey in April to its lowest level in more than a year.

Even though it's been on the market just a month, the Apple iPhone is already registering in the ChangeWave survey results - garnering 1% of current cell phone market share. But it's when respondents were asked about their planned cell phone purchases over the next six months that the full transformational impact of the iPhone is seen.

Among respondents who say they plan to buy a cell phone in the next six months, an astounding 16% say they'll purchase an iPhone - catapulting Apple ahead of all other manufacturers.

Importantly, for the third consecutive survey, Motorola's future share of planned purchases among consumers has suffered a dramatic decline - falling from a high of 33% in October 2006 to just 14% currently.

The survey findings were more upbeat for Research in Motion (RIMM), with BlackBerry sales (13%; up 3-pts) looking significantly stronger over the next six months.

"There's no doubt about it, consumers are embracing the iPhone. And judging by the numbers, they will continue embracing it," said Tobin Smith, founder of ChangeWave Research and editor of ChangeWave Investing. "The ascendance of the iPhone is going to be a game-changer for both cell phone manufacturers and cellular service providers."

The survey also asked consumers how satisfied they were with their current cell phone, and found the iPhone registering the highest satisfaction levels of any device. An extraordinary 77% of iPhone owners said they were "Very Satisfied" with their new Apple product. The RIM Blackberry also received a relatively high rating, with one-in-two owners (50%) reporting they were "Very Satisfied."

At the other end of the spectrum, just 36% of Motorola owners, 34% of Palm owners and 29% of Sony/Ericsson owners reported that they were "Very Satisfied" with their cell phones.

The Upheaval among Cellular Service Providers:

ChangeWave also looked at the cellular service providers market, where the survey found clear signs of the impact Apple's exclusive agreement with AT&T is having on the competition.

In terms of current market share, for the first time in more than a year Verizon (29%) registered a decline - down 1-point. T-Mobile (10% down 1-pt) has also declined. AT&T, on the other hand, increased its market share by 1-pt to an all time high of 28%.

But it's when ChangeWave queried respondents who reported they'll switch their cellular service providers over the next six months, that the full impact of the iPhone on service providers can be seen.

AT&T (30%; up 2-pts) is once again adding to its ever growing lead over Verizon in terms of future buying, and is now the top choice among those likely to switch service providers.

At the same time - and for the third-consecutive survey - Verizon (19%; down 3-pts) is continuing to trend down among this critically important group.

The outlook going forward also appears bleaker for T-Mobile (5%; down 1-pt) and Sprint/Nextel (3%; down 1-pt).

The one bright note for Verizon is that they continue to lead in terms of customer satisfaction - with 46% of its current customers saying they are "Very Satisfied" and another 46% "Somewhat Satisfied " with their Verizon service. In comparison, the ratings for AT&T are not nearly as high, with 31% saying they are "Very Satisfied", and 54% "Somewhat Satisfied".

The iPhone momentum ChangeWave identified in two previous surveys (January 2007 and April 2007), coupled with the exceptionally strong momentum found in the current survey, points to an upheaval among cell phone manufacturers and service providers as a result of Apple's new multi-functional device.

For the complete story on the Apple iPhone and its transformative effects on the cellular industry, please go to http://www.changewave.com

The ChangeWave Alliance is a network of over 10,000 highly qualified business, technology, and medical professionals in leading companies of select industries--credentialed experts who spend their everyday lives working on the front line of technological change. ChangeWave surveys its Alliance members on a range of business and investment research and intelligence topics, collects feedback from them electronically, and converts the information into proprietary quantitative and qualitative reports.

For a copy of the entire ChangeWave Research consumer spending survey, please contact Darlene March, 714-887-8021.